ASHOK CHATURVEDI V. COMMISSIONER OF INCOME TAX

W.P.(C)/533/2015

AI Insights

The case involves Ashok Chaturvedi, the Chairman cum Managing Director of M/s Uflex Group of companies, who petitioned against the Commissioner of Income Tax (CIT) for not condoning a delay of 40 months in filing a revision petition under Section 264 of the Income Tax Act, 1961. The delay was in relation to the assessments made for AYs 2005-06 to 2008-09, concerning excess remuneration paid to him without central government approval, which was later refunded. The CIT had declined to condone the delay, leading to the writ petition. The High Court, after considering the circumstances and the petitioner's efforts to rectify the situation, decided to set aside the CIT's orders and restore the revision applications for a decision on merits.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 687962 (HC-DELHI)
• Appeal Type: Others
• Pronouncement Date: 18-03-2016
• Assessment Year: misc
• Laws Referred To: Income Tax Act 1961, Companies Act 1956
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: RAHUL CHAUDHARY
• Assessee Lawyers: M P RASTOGI; K N AHUJA
• Keywords: Central Government approval; Delay in filing; Excess remuneration; Income Tax; Revision petition
• Section: 143(3); 153A; 264; 198; 309; 310

Judgement Text

"$~ * 10. + 11. + 4 IN THE HIGH COURT OF DELHI AT NEW DELHI W.P.(C) 530/2015 ASHOK CHATURVEDI , ' . Through; Mr M. P. Rastogi with Mr K. N. A^huja, Advocates. versus COMMISSIONER OF INCOME TAX Respondent Through; Mr Rahul Chaudhary, Senior Standing Counsel. WITH W.P.(C) 532/2015 ASHOK CHATURVEDI Petitioner Through; Mr M. P. Rastogi with Mr K. N. Ahuja, Advocates. versus COMMISSIONER OF INCOME TAX Respondent Through; Mr Rahul Chaudhary, Senior Standing Counsel. WITH 12. + W.P.(C) 533/2015 ASHOK CHATURVEDI Petitioner Through; Mr M. P. Rastogi with Mr K. N. Ahuja, Advocates. versus JV.P. (C) 530/2015 & other connectedmatters ^ Signed By:RAM DATT Signing Date:01.10.2024 16:36 Certify that the digital and physical file have been compared and the digital data is as per the physical file and no page is missing. Signature Not Verified I COMMISSIONER OF INCOME TAX Respondent Through: Mr Rahul Chaudhary, Senior Standing Counsel. WITH 13. + W.P.(C) 534/2015 ASHOK CHATURVEDI Petitioner Through: Mr M. P. Rastogi with Mr K. N. Ahuja, Advocates. versus COMMISSIONER OF INCOME TAX Respondent Through: Mr Rahul Chaudhary, Senior Standing Counsel. AND 14. I + W.P.(C) 535/2015 ASHOK CHATURVEDI Petitioner Through: Mr M. P. Rastogi with Mr K. N. Ahuja, Advocates. versus COMMISSIONER OF INCOME TAX Respondent Through: Mr Rahul Chaudhary, Senior Standing Counsel. CORAM: JUSTICE S.MURALIDHAR JUSTICE VIBHU BAKHRU ORDER % 18.03.2016 1. Despite three hearings no counter affidavit has been filed till date. With fV.P. (C) 530/2015 & other connected matters Page 2 of5 having been issued way back on 27® January 2015, the Court is not inclined to grant further time to the Respondent for that purpose. 2. The point urged in this writ petition is short. By the impugned order dated 10 July 2014, the Commissioner of Income Tax (Central) - III ('CIT-Iir) has declined to condone the delay of around 40 months in the Petitioner filing a revision petition under Section 264 of the Income Tax Act 1961 ('Act') against orders ofassessment dated passed under Sections 153A/143 (3) ofthe Act for AYs 2005-06to 2008-09. 3. The Petitioner is the Chainnan cum Managing Director ('MD') of M/s Uflex Group of companies, the parent company of which is Uflex Ltd. a company incorporated under the Companies Act, 1956. It is stated that he has been the MD Uflex Ltd. since its incorporation in 1988. He was reappointed as such for aperiod of five years effective from 1 st April 2004. His remuneration was fixed by a resolution ofthe company at 9.48% ofthe net profit ofsaid company for Financial Year ('FY') 2004-05 onwards. At the stage no approval of the central government was obtained in terms of Sections 198, 309 and 310 of the Companies Act, 1956. The remuneration received in the sum of Rs.534.11 lakhs was reflected in the income tax returns for the said FY and it was assessed by an order dated 23'\"'' December, 2009. 4. When the appointment of the Petitioner as MD was renewed with effect from 1st April 2009 it was realized that approval ofthe central government had to be obtained. The central government while directing that the remuneration paid to the Petitioner should not exceed 5% ofthe net profit of W.P.(C) 530/2015 & other connected matters Page 3 of5 the company directed that \"the company may file a separate application for waiver of excess remuneration paid to him or recover the excess arnount from him\" for FYs 2004-05 to 2008-09. 5. The Petitioner states that after failing through several attempts to get the Ministry of Corporate Affairs (MCA) to regularize the excess remuneratiori paid to him by the company, he has since refunded Rs.l 184.79 lakhs to the company towards the excess remuneration for FYs 2004-05 to 2008-09 on 25''^ March 2014. 6. Thereafter the Petitioner filed a petition under Section 264 of the Act before the CIT-III seeking to revise the assessments made for AY 2005-06 to AYs 2009-09 since the income earned was on accrual basis and with the excess having been returned to the company, the Petitioner would be entitled to a refund. This application was delayed by over 40 months and the Petitioner sought to explain the delay in filing the revision petition with reference to the above facts. 7. In the impugned order the CIT-III has held that on the above facts it could not be said that the Assessee was prevented by sufficient cause from filing the application under Section 264 within the time prescribed and therefore, the delay of40 months could not be condoned. 8. Having heard the learned counsel for the parties and having examined the impugned order and other documents, the Court is of the view that the explanation offered by the Petitioner for the delay is indeed satisfactory. Considerable time was consumed in the Petitioner attempting to get the fV.P.fCJ 530/2015 & other connected matters Page 4 of5 MCA to regularise the excess payment and he ultimately refunded to the company the excess remuneration on 25th March 2014. IN the circumstances, the Court is ofthe view that the Petitioner's revision petitions ought to be considered on merits. 9. In that view of the matter, the impugned orders dated 10th July 2014 passed by the CIT-III are set aside and the revision applications for AYs 2004-05 to 2008-09 are restored to the file of the CIT-III for being dealt jvith on merits. It is clarified thatthe Court hasnot expressed any opinion on the merits ofthe said revision petitions. 10. The Petitioner will now appear before the CIT, Central-Ill on 2\"'' May, 2016. 11. The petitions aredisposed of in the above terms. A certified copy of this order be despatched forthwith to the CIT-III. S.MURALIDHAR, J VIBHU BAKHRU, J MARCH 18, 2016 MK W.P. (C) 530/2015 & other connected matters Page 5 of5 "